Negligence, cap on damages, focus of malpractice reform bill

Of the people who've contacted state legislators to oppose overhauling North Carolina's medical malpractice laws, John Faulkner is unique.

He's a doctor. A 2002 operating room explosion badly burned his wife on her face, neck and chest when a surgeon's cauterizing tool got too close to an oxygen stream, as Faulkner told lawmakers in a letter.

After three years of litigation, Faulkner learned how difficult it can be to induce doctors and hospitals to admit mistakes, he said. And capping damages so that difficult cases are less attractive to attorneys, he added, isn't the way to reform malpractice insurance.

Senate Bill 33, which has passed the state Senate and is likely to get a House committee hearing this week, is built on two controversial changes: a monetary cap of $500,000 on damages of pain and suffering that juries can award patients, and a tougher standard to prove malpractice in emergency cases. (See below for a breakdown of the rest of the bill.)

Pain and suffering damages, also known as non-economic damages, are different from economic damages, which are meant to cover the future cost of medical care for the injured person as well as lost wages. They're also different from punitive damages, which juries can award when they want to punish a defendant.

Both changes worry opponents, who say lawmakers are restricting a jury's ability to decide how much a patient's suffering is worth. But supporters—including the Republican majority in the Legislature—say these reforms will save millions of dollars.

Senate President Pro Tem Phil Berger recently went so far as to promise that the GOP's malpractice bill will "make health care more affordable and accessible for all North Carolinians," as he said in a statement.

Studies consistently show this is at least partially true. Malpractice reforms like the ones proposed for North Carolina save money on health costs. But those savings are relatively small—one-half of 1 percent or less of total health care costs, according to a pair of studies by the Congressional Budget Office in Washington, D.C.

And it's uncertain how much of those savings would trickle down to the patient, versus staying with insurance companies, doctors or hospitals. Meanwhile, the trade-offs for these savings—fewer and lower jury awards—harm the worst-injured patients the most, according to a Harvard analysis of several malpractice reform studies.

"The best evidence shows that the caps will modestly constrain (costs)," said Harvard law and public health professor Michelle Mello, who studies the issue. "We don't know what we lose in terms of protection for the patient ... That just has not been empirically answered."

Mello's studies also concluded that damage caps are the key reforms to saving money. The caps limit what insurance companies must pay out, which lowers malpractice insurance rates for doctors. Caps also cut down on "defensive medicine," procedures doctors prescribe based on worries about being sued, not because they're medically necessary.

Yet the cap is constitutionally vulnerable. If it doesn't survive a legal challenge, whatever savings the bill sponsors promise could be virtually wiped out. However, other changes in the bill, such as one that would make it harder to sue doctors, would remain.

Two retired state Supreme Court justices have written legislators to predict the cap will be thrown out by the courts if SB 33 were to become law. A similar cap was tossed last year by the Georgia Supreme Court, which unanimously decided that it violates "the constitutional right to trial by jury."

Even SB 33 itself anticipates this. It specifically identifies the cap section as potential bait for a court challenge, telling future lawmakers how to proceed if the cap is declared unconstitutional. The cap section is the only one singled out like this in the bill.

The bill does not cap economic and punitive damages, just non-economic ones, which supporters say leaves juries plenty of leeway. But juries wouldn't be told of the non-economic cap. If they award more than $500,000, a judge would simply lower the amount. That could leave jurors with a skewed view of what they've given a victim.

Senate Minority Leader Martin Nesbitt, an attorney from Buncombe County, has argued that the non-economic cap is unfair to children and the poor, who don't have high-paying jobs, so their lives are worth less monetarily when the jury accounts for lost wages in determining economic damages.

Bill proponents nearly concede that point. Public relations specialist Joyce Fitzpatrick is working on the issue for the N.C. Medical Society, which supports the bill. She said in an email that plaintiffs can always ask the court to estimate lost future wages for a child. But she acknowledged that these arguments are "wide open to challenge by the defense," because they are speculative.

The other controversial part of SB 33 deals with "gross negligence." Currently for a malpractice case to proceed, the plaintiff must convince the court that a doctor failed to meet a standard of care—essentially to do what his or her peers would have done. This bill would change that standard in emergency situations.

In emergencies, doctors would be immune from legal damages unless they showed "gross negligence." The Georgia Supreme Court narrowly upheld this reform last year. Quoting older cases, it defined gross negligence as "equivalent to (the) failure to exercise even a slight degree of care," or lacking "the diligence that even careless men are accustomed to exercise."

Attorneys working against the SB 33 have said the proposed new standard would make it almost impossible to sue an emergency room doctor. But Fitzpatrick said the "gross negligence" requirement covers only "true emergency situations," when patients "must be treated regardless of their condition ... or known/ unknown medical history." Once a patient is stabilized, she wrote in an email, the standard returns to ordinary negligence.

But others say attorneys won't want to touch cases with such a difficult burden of proof.

"It'll be impossible for any patient to ever sue a physician in the emergency department. ..." Faulkner said. "The physician would literally have to show up for their shift drunk out of their mind."

Faulkner also questions claims that SB 33 will cause doctors to move to North Carolina because of its hospitable legal environment—an effect that is confirmed by some studies and unproven by others. He also questions whether SB 33's changes will actually reduce instances of "defensive medicine," which, he acknowledges, is common.

Proponents are banking on savings in this area, and a 2003 Harvard survey of Pennsylvania doctors found that defensive medicine "correlated strongly" with doctors' lack of confidence that their malpractice insurance would protect them from suits.

The proposed caps could bolster that confidence, according to Dr. Mary Lane, a Lumberton gynecologist. Lane used to deliver babies, a practice that generates a lot of lawsuits. She quit, she said, shortly after an emergency delivery went wrong and the mother's placenta tore away from her uterus. Mother and child were OK, but it "was just luck," Lane said.

Lane said doctors often feel targeted, adding that even if reforms don't reduce the cost of insurance premiums, they'll give doctors peace of mind.

The rest of the bill

Beyond the cap on damages for pain and the "gross negligence" change, the bill contains several other proposals:

Includes a new requirement that an expert witness review "all medical records ... then available to the plaintiff" before a complaint is filed. Otherwise, the complaint "shall be dismissed." It also requires more information to be disclosed—earlier in the legal proceedings—about expert witnesses. This includes disclosure of journal articles and other materials they've published in the past 10 years and the instances in which they've testified at a trial over the previous four years.

Allows insurance companies to pay awards over many years, instead of in a lump sum

Contains new requirements for juries to categorize monetary awards, including current economic damages, future economic damages and loss of future earnings

Permits the monetary cap on pain and suffering damages to increase every three years based on the Consumer Price Index, which measures cost of living

Who's supporting? Who's opposing?

The North Carolina Medical Society formed an offshoot group, North Carolinians for Affordable Health Care, to lobby in support of SB 33.

The N.C. Chamber of Commerce, a powerful lobby at the capitol, is also backing the bill. So are various doctors', hospital and insurance groups, as well as conservative outfits, including Americans for Prosperity.

In opposition, trial lawyers have formed Advocates for Justice, which has funded a series of commercials against the bill. Lawyers have also helped bring patients with stories of injury and disfiguration to the Legislature to testify against the bill.